Correlation Between Latch and Smartsheet

Can any of the company-specific risk be diversified away by investing in both Latch and Smartsheet at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Latch and Smartsheet into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Latch Inc and Smartsheet, you can compare the effects of market volatilities on Latch and Smartsheet and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Latch with a short position of Smartsheet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Latch and Smartsheet.

Diversification Opportunities for Latch and Smartsheet

0.65

Correlation Coefficient

Latch  Smartsheet

Poor diversification

The 3 months correlation between Latch and Smartsheet is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Latch Inc and Smartsheet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smartsheet and Latch is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Latch Inc are associated (or correlated) with Smartsheet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smartsheet has no effect on the direction of Latch i.e., Latch and Smartsheet go up and down completely randomly.

Pair Corralation between Latch and Smartsheet

If you would invest  4,880  in Smartsheet on August 30, 2024 and sell it today you would earn a total of  720.00  from holding Smartsheet or generate 14.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Latch Inc  vs.  Smartsheet

Latch Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Latch Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Latch is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Smartsheet

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smartsheet are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Smartsheet reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Latch and Smartsheet

The main advantage of trading using opposite Latch and Smartsheet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Latch position performs unexpectedly, Smartsheet can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Smartsheet will offset losses from the drop in Smartsheet's long position.

The idea behind Latch Inc and Smartsheet pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.